Wednesday, December 10, 2008

American International Group Inc., whose bonuses are under fire from U.S. lawmakers, offered cash awards to an additional 38 executives in a 'Retention Program' with payments of as much as $4 million. The incentives range from $92,500 to $4 million for employees earning salaries between $160,000 and $1 million, Chief Executive Officer Edward Liddy explained in a letter to Representative Elijah Cummings.

The New York-based insurer had disclosed that 130 managers would get the awards and that one executive would get $3 million. AIG, which received a U.S. rescue package of more than $152 billion, has been criticized for saying it will eliminate bonuses for senior executives while still planning to hand out “cash awards” that double or triple the salaries of some managers.

The payments, designed to keep top employees at AIG, will hence forth be called Retention money.

Ya, a retention program is designed to keep good talent when there is a shortage of talent in the market and when corporations are in bidding wars for employees. This is not currently happening. There are no bidding wars. Millions of people are out of work - and when they go back they are taking pay and benefit cuts.

Iamcoyote, that is exactly what I was pondering. Hmmm, you bankrupt a company and then you get a big fat 'Retention" check and retain your position within the company. Up is down, right is wrong, left is right, etc.

The Government deal should have included a clause that said all those in positions of power within said company must submit their resignations immediately prior to receiving bailout money.

Say, just wondering. Back in the 90's I was taking graduate econometrics courses at a major Midwestern university while completing a degree. There was a Thuy Lam who was fairly knowledgeable about financial markets and dabbled in stocks market a bit. As I remember, you got hit pretty hard in tech stocks. The picture you post is different than what I remember, but would that be you? If so, by your thinking, when does the market correct?